Morning Commentary

Dec corn down 1 at $3.47

Nov beans down 3 ¼ at $8.2025

The DOW is up

USD is weaker

Crude oil up $.96 at $69.87

Good morning,

Corn prices continue to dance to the sound of lower-lows. Despite contraction in both domestic and global ending supplies when compared to last year, the market feels like it could remain under nearby pressure. One could certainly argue that we are technically “oversold”, and a bounce is inevitable, as prices have tumbled -40 cents since early-August. Bulls continue to argue that the current USDA yield estimate for the U.S. is overstated at 181.3 bushels per acre and at best should be 180. Bulls also argue that the USDA will need to further raise their export estimate. When you add it all together many bulls are forecasting a sub-1.5 billion bushel ending stock estimate vs. the USDA’s current estimate of 1.77 billion bushel estimate.  On the demand side of the equation, there’s a bit of uncertainty surrounding a Reuters recent announcement that major U.S. ethanol producer Green Plains Inc is shutting down two ethanol plants in Iowa (Superior and Lakota) and reducing their production at another plant in Minnesota (Fairmont). On the supply side, the USDA left overall crop conditions “unchanged” at 68% rated GD/EX. Corn reported as “dented” was estimated at 93% vs. the 5-year historical average of 86%. Corn reported as “mature” was estimated at 54% vs. the 5-year average of 36%. Corn actually “harvested was reported at 9% vs. the 5-year historical average of 6% by this date.

Soybean prices seem anchored at or near contract lows. Not only are bulls battling another round of negative tariff headlines, but yesterday’s monthly NOPA crush report was also a bit of a disappointment. Most sources were looking for the August NOPA crush number to come in around 164 million bushels but instead it was about -5 million bushels light at 158.885 million bushels. A couple of other bearish headlines include a more cooperative weather forecast in South America, with better rainfall totals in both Argentina and Brazil. Also keeping the bears engaged is the continued announcements of African Swine Fever spreading inside China and parts of the European Union. Here at home the USDA showed soybeans “dropping leaves” at 53% vs. the 5-year average of 36%. Soybeans harvested was reported at 6% complete vs. the 5-year historical average of 3%. The only state really running behind schedule is Arkansas. Traditionally they would have about 18% harvested, instead they only have about 9% complete and out of the field. Illinois, Iowa and the Dakota’s are running well ahead of schedule. Kansas and Michigan are the only two states to have not reported any harvest activity.

Agricultural Economic Insights have released another insightful white paper. With farm income having dropped and continuing to decline, there is beginning to be more attention paid to the level of debt in the U.S. farm sector. Today, the total indebtedness stands at $407 billion. Total debt has grown steadily, increasing by 46% since 2010 (an annual compound growth of 5% per year). The total interest cost on this debt is forecast to be $21.9 billion dollars for 2018.

The FDA has unveiled a plan to combat antimicrobial resistance in settings like hospitals and farms. Part of the effort will include incentivizing development of new antibiotics and promoting better tracking of antibiotic resistance at hospitals. In terms of veterinary medicine, FDA is looking to expand its work to ensure more veterinary oversight of antimicrobials used on farms that raise animals for food. (Source: Politico)

Major dairy state Wisconsin lost 47 dairy farms in August, putting it on track for its worst year since 2013 according to Wisconsin Public Radio. The decline is attributable to a bleak market, industry consolidation and farmers retiring without a successor to take over the farm. (Source: WPR)

Tyson Foods Chief Executive Tom Hayes will step down for personal reasons, after about two years in the role. The company appointed Noel White as its new CEO, effective Sept. 30. White was the group president for beef, port and international, joining the company in 2001 as part of Tyson’s acquisition of IBP, which White joined in 1983. Tyson’s stock had tumbled 22% year to date through Friday, while the SPDR Consumer Staples Select Sector had slipped 3.7% and the S&P 500 SPX, -0.58% had gained 8.7%


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